Supply Chain at a Crossroads – Back to the Shadows or into the Spotlight?

Supply Chain at a Crossroads

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Unchaining Change Leadership

Supply Chain has historically been considered a back office function, necessary but lacking in prestige and strategic value. The Coronavirus pandemic created a dramatic and highly visible disruption in that paradigm. Suddenly Supply Chain and its importance was on the minds of political and business leaders, and the common person, everywhere around the world.

When the pandemic winds down there is a very real danger that people will go back to doing, and viewing, things the way they were before the pandemic. They will quickly forget the pandemic’s impacts and the need for the strategic deployment of more robust and resilient Supply Chains.

Does that mean that the importance and value of Supply Chain is at a crossroads? Will Supply Chain go back into the shadows as a back office function, or will Supply Chain take its place centre stage under the spotlight which is its rightful place?

The Case for Supply Chain Staying in the Shadows

For far too long Supply Chain has not got the respect that it deserves. There are many reasons for this lack of due consideration:

  1. Many Supply Chain operations, like manufacturing, purchasing, warehousing, and logistics are hands on, blue collar type jobs. They aren’t considered by some to be glamorous like functions such as Sales and Marketing.
  2. Companies historically have excelled and differentiated themselves because of their R&D capabilities, their products, and their go to market strategy. As such the leaders of those functions have tended to have senior seats at the Executive table.
  3. Supply Chain leaders haven’t risen above their station. While many Supply Chain leaders are superb within their functional construct, far fewer have demonstrated an ability to lead beyond these areas and run the overall business.
  4. A lack of Supply Chain education and certification curriculum that goes beyond functional training. Much of the training is in specific skills (eg. procurement techniques) as opposed to educating the next generation of leaders equipped with the broadest possible set of management and leadership skills to run the entire end to end operations of a massive global company.
  5. Supply Chain can be hard to truly understand so outsiders have a simplistic view of what it involves. Supply Chain is complicated. It takes tremendous expertise to know how to make it work. Because of this complexity those who are not grounded in Supply Chain principles view it very simplistically and underestimate the intellectual prowess required to make it run effectively.
  6. Investing in Supply Chain can be expensive, resource intensive, and lengthy. These factors coupled with a lack of understanding of the function from the outside can result in extraordinary barriers to investment. And this lack of investment will just keep Supply Chain processes and infrastructure in an antiquated state.
  7. Short sighted corporate leadership. Too many company executives were caught flat footed when the pandemic struck. Lockdowns shut the doors for many companies, and for many of them permanently. They didn’t recognize the value of Supply Chain in establishing Ecommerce processes and capabilities enabling them to continue conducting business online even when their physical customer facing operations were closed. Visionary leaders would understand the importance of creating these Supply Chain channels.
  8. History repeats itself. It is true that the pandemic has brought Supply Chain to the forefront. The very survival of thousands of companies depended on Supply Chain rising to the challenge and keeping those companies afloat. But people have short memories. After the pandemic is order too many people will go back to their old ways of thinking, forgetting about the true value of Supply Chain which kept their companies alive.

The Case for Supply Chain Getting in the Spotlight

Luckily there are many signs that Supply Chain, and its practitioners, is coming out from the shadowy backrooms and into the forefront of the corporate and government agenda.

  1. Never before in history has the words “Supply Chain” so frequently rolled off the tongues of Presidents, Prime Ministers, CEOs, and the media. The pandemic exposed to everyone both the importance of, and the fragility of, the global Supply Chain. When stores run out of toilet paper and other basic household necessities, when hospitals run out of masks and ventilators, it’s time for everyone to take notice and give Supply Chain its due.
  2. The latest generation of people entering the profession have bigger expectations and goals. While there is always room for people to specialize in specific functions, Supply Chain is increasingly recognized as the area which does involve managing and leading a large swath of the operations of any organization.
  3. The future growth, and survival, of companies is increasingly dependent on how they deploy technology. The Digital Supply Chain involves the end to end electronic connectivity of every part of any company not only inside but on the outside as well with all tiers of suppliers and customers. No other function but Supply Chain understands, can envision, can implement, and can manage the Digital Supply Chain. This will be the central operational strategy for all companies in the future.
  4. Supply Chain is a massive source of competitive advantage and differentiation. The entire world of ECommerce is based on Supply Chain, from customer order management through to fulfillment and delivery and reverse logistics.
  5. Cash is king in any company. If you don’t have cash you are dead. And which function controls most of the cash flow of any organization? Supply Chain. Inventory levels and Accounts Payable can be huge consumers of cash unless your Supply Chain is efficient.
  6. No other function has its fingers on the pulse of the operations of a company like Supply Chain. Supply Chain visibility starts with product design and sourcing, customer demand and commitments, manufacturing capacity and efficiency, materials pricing and inventory performance, logistics capabilities and effectiveness, financial performance in ROI, P&L and Cash flow. No other function has this breadth and depth of business knowledge, experience and control.
  7. Risk management is real. While global pandemics are once in a century events, there are disasters, both natural and man-made, occurring somewhere in the world each and every day. These disasters can disrupt any business any time and anywhere. Who foresaw the Suez Canal blockage crisis? Apparently no one. But it occurred just the same and caused billions of dollars of impacts to the global economy. The need to be prepared for these risks requires robust and resilient Supply Chains. Otherwise the risk is too great.
  8. We’re smart and we learn from our mistakes. There is no question that the world was not prepared for the Coronavirus pandemic. The world is more interconnected than ever before in human history, making the odds of having another global disaster more likely. But there were many lessons we learned from the pandemic. And the personal and professional impact has been so profound that far too many people will not forget. They will be strengthened in their resolution to ensure we are more ready than ever before for the next event. And who will be at the forefront of this improved readiness? Supply Chain!

Supply Chain at a Crossroads?

Supply Chain is at a crossroads. There are factors which can cause us to shrink back into the shadows. But there are forces which will command us to be in the spotlight.

See also  Post Pandemic Stress Disorder in Supply Chain!

Personally I believe that Supply Chain has been increasingly seen in the spotlight and the centre of the corporate agenda. But it is not an easy path, and it is not a straightforward, unwavering path.

The world needs Supply Chain to be in the spotlight. And the great people who work in the profession are the answer together us there. Supply Chain at a crossroads? Yes, but the answer as to which way to go is clear.

Originally published on August 3, 2021.

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